Media Competition on the Internet
AbstractWe present a model of competition between two advertising-financed media firms when consumers dislike advertising. We apply the model to analyze competition between Internet portals and find that equilibrium prices of advertising are higher the less differentiated the portals are perceived to be. Moreover, we find that the portals' aggregate profit increases if they integrate vertically with advertisers. This is true even if there is perfect competition between advertisers for advertising space. But if the portals are close substitutes, then it is profitable for one of the portals not to combine with an advertiser, and we end up with an asymmetric equilibrium with only one vertical merger - despite aggregate profits being higher with two.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.
Volume (Year): 4 (2005)
Issue (Month): 1 (January)
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- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2005.
"Financing of Media Firms: Does Competition Matter?,"
CIE Discussion Papers
2005-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
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- Hans Jarle Kind & Lars Sørgard, 2013. "Market Segmentation in Two-Sided Markets: TV Rights for Premier League," CESifo Working Paper Series 4060, CESifo Group Munich.
- Junseok Hwang & Dongook Choi & Jongeun Oh & Yeonbae Kim, 2009. "Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency," TEMEP Discussion Papers 200925, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
- Martin Bandulet, 2005. "On the Efficiency of Spam Mailing and Portal Advertising," Discussion Paper Series 275, Universitaet Augsburg, Institute for Economics.
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- Dong Choi & Jongeun Oh & Yeonbae Kim & Junseok Hwang, 2012. "Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency," Review of Industrial Organization, Springer, vol. 40(1), pages 51-73, February.
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